Volkswagen (VW) is planning to invest EUR100 million (USD137 million) in its Indian operations towards launching more products and boosting product localisation. "At present, an investment of approximately EUR100 million is in the decision process for new models and for further localisation of parts and components," said VW India president and managing director Mahesh Kodumudi, reports the Press Trust of India. However, the executive did not state a timeline for the investment. Important among the plans are the introduction of a compact sedan, a compact sport utility vehicle (SUV) and a hatchback. "We intend to make these investments step-wise as decisions are realised. In summary, we intend to make these 'further large investments' over a period of the next few years before the end of this decade," said Kodumudi, adding that a decision on introducing some of these vehicles will be made soon. The company is also considering launching the next-generation Passat sedan.
Significance: The move, if finalised, would pave the way for the revival of the German brand, which is struggling to gain traction in India. In the first four months of this year, VW's sales in India dropped 39.5% year on year (y/y) to 14,392 units. This compares with the 7.5% y/y sales decline registered in passenger vehicle volumes in the same period. VW showcased the Taigun compact crossover earlier this year at the New Delhi Auto Expo and is reported to be working on a compact version of its Vento sedan. Although the German automaker has been popular among certain groups of buyers, it has failed to make inroads in the overall market. Meanwhile, the success of Honda and Ford with compact sedans and SUVs has attracted several automakers to the sub-four-metre category, which enjoys excise-duty benefits.
